Dear Momentum Options Subscriber,

The bears kept Wall Street confused on Wednesday, as the market traded within another tight range during the backtest to fresh support. The bulls tried to push higher highs and blue-sky territory, but they ran out of gas following the opening pop to fresh resistance.

The Dow dropped 37 points, or 0.2%, to finish at 18,495. The blue-chips kissed 18,651 shortly after the open and made another failed run to upper resistance at 18,500-18,600. The bears pushed a low of 18,468 intraday, but support at 18,400-18,350 held.

The S&P 500 gave back a 6-pack, or 0.3%, to settle at 2,175. The index tested its all-time intraday high of 2,187 and is still trying to push my near-term fluff targets of 2,180-2,200. Near-term support at 2,175-2,170 held following the backtest to 2,172.

The Nasdaq fell 21 points, or 0.4%, to end at 5,204. Tech made a run to 5,227 to keep blue-sky targets in play at 5,225-5,250. Support at 5,200-5,175 was breached following the low of 5,193. A close below the latter would be a bearish development.

The Russell 2000 declined 8 points, or 0.7%, to close at 1,223. The small-caps pushed a morning high of 1,232 but failed to clear resistance at 1,240-1,250 once again. Support at 1,225-1,220 is back in the mix after Wednesday’s test to 1,220. Backup support is at 1,220.

The S&P 500 Volatility Index ($VIX, 12.05, up 0.39) failed to hold near-term support at 11.50, as Wednesday’s bottom reached 11.37. Lower resistance at 12.50-13.50 was tested, and a close above the latter would be a bearish development.

From desk to press, futures look like this: Dow (+51); S&P 500 (+5); Nasdaq 100 (+14); Russell (+4).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 61-21 (74%). All trades are dated and time stamped so new subscribers can look at the past history to see how the trades have played out.

Do not risk more than 5% of your trading account on any one trade but do try to take all of the trades. Please remember, all “Exit Targets” and “Stop Targets” are targets. You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless I list one. I will send out a “Profit Alert” or “New Trade” if I want you to close a position or if a new trade comes out. Otherwise, follow instructions at all times in the 9 a.m. and 12 p.m. – 1 p.m. updates. Also, I will usually give you a heads-up if I think I’m going to send an email outside of these time frames.

All prices given in this update are current as of 8:00 a.m. EST.

I hereby disclose that I will be participating in the following trade(s).

 

MGM Resorts International (MGM, $24.63, down $0.27)

MGM September 25 calls (MGM160916C00025000, $0.59, down $0.17)

Entry Price: $0.70 (8/8/2016)

Exit Target: $1.40

Return: -16%

Stop Target: None

Action: Wednesday’s low tapped $24.58. Support is at $24.50-$24.25, followed by $23.75 and the 50-day moving average. A close below $24 would be a bearish development. Resistance is at $24.75-$25. The 52-week high for MGM is at $25.29.

 

Bank of America (BAC, $14.81, down $0.38)

BAC September 15 calls (BAC160916C00015000, $0.33, down $0.16)

Entry Price: $0.50 (8/8/2016)

Exit Target: $1.00

Return: -34%

Stop Target: None

Action: Yesterday’s low tapped $14.78. Support is at $15-$14.75, followed by $14.50 and the 200-day moving average. Resistance is at $15.25-$15.50.

 

Rambus (RMBS, $13.59, down $0.21)

RMBS September 14 calls (RMBS160916C00014000, $0.30, down $0.09)

Entry Price: $0.40 (8/1/2016)

Exit Target: $0.80

Return: -25%

Stop Target: None

Action: Support is at $13.50-$13.25. Wednesday’s bottom reached $13.47. Resistance is at $13.75-$14.

 

Vuzix (VUZI, $7.35, down $0.26)

VUZI September 10 calls (VUZI160916C00010000, $0.30, down $0.10)

Entry Price: $0.97 (7/27/2016)

Exit Target: $2.00

Return: -69%

Stop Target: None

Action: Support is at $7.25-$7. Fresh resistance is at $7.50-$7.75.

 

Viavi Solutions (VIAV, $7.28, down $0.05)

VIAV September 7 calls (VIAV160916C00007000, $0.51, down $0.04)

Entry Price: $0.55 (6/23/2016)

Exit Target: $1.10

Return: -7%

Stop Target: None

Action: Support is at $7, with $6.90-$6.85 and the 50-day moving average serving as backup. Resistance is at $7.50. Earnings are due out today after the close.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options